Employers' choices mitigate rising care costs

In light of rising health care costs, there are measures that employers and human resource managers can use to control costs while assessing the needs of their employees. The costs associated with physician office visits, prescription drugs, hospitalization and out-of-pocket expenses are important to not only the employees but also the employers as they decide how to spend their health care dollars.

It is important to determine which employees have upcoming medical expenses and how best to meet their needs as an employer. Health care managers should consider the aforementioned costs at renewal time while offering more choices to their employees in order to meet their needs.

One choice is a dual-option program that both large and small employers are using to address the economic and medical needs of their employees.

Major savings also can be found in changing prescription benefits by offering generic-only options to employees who do not take medications regularly. Changing a prescription drug plan can account for increased savings, and employers may want to consider restricting maximum benefits.

Office visit co-pays typically do not account for major savings, but it could be important for employees to have the option of a co-pay, as it may increase the likelihood of employees choosing to have medical services and procedures. Wellness benefits also are generally considered beneficial for the employee, as they often lead to early detection of major diseases.

Hospitalizations are the greatest cost factors in claims, deductibles, and out-of-pocket expenses, despite the fact that only one in seven people is hospitalized each year. It is typical for only 20 percent of a company’s employees to use 80 percent of the care provided by the company. It is important to remember that inpatient and outpatient hospitalization costs are the fastest-growing part of health care expenditures.

Employer savings

There are several steps that can be taken by employers who want to save money on health care:

• Identify those at risk by encouraging early treatment and control. For example, give money to employees who take a health risk assessment and join appropriate disease management programs.

• Encourage and promote healthy lifestyle changes such as diet and exercise, as obesity has a large effect on the number of chronic conditions and health-related quality of life. Additionally, smoking and problem drinking can have similar effects to being overweight.

• Subsidize fitness by helping the staff pay for exercise classes, weight management, nutrition counseling or smoking cessation programs. (Employers can reward those who volunteer for such programs but cannot penalize those who choose not to participate. Basing incentives on achieving specific results risks costly lawsuits.)

• Watch out for counterproductive cost cutting. Shifting more costs to employees may lead to some not taking medications, increasing the incidence of hospitalizations and raising long-term costs.

• Employers and employees need to inquire about prescription costs and generic drugs.

• Audit your insurance rolls to weed out dependents and employees who are no longer eligible.

Broker role

It is crucial that employers seek out a broker to discuss, analyze, and review their health care benefits. The broker should be educated in the new guidelines associated with the Health Insurance Portability and Accountability Act, the Consolidated Omnibus Budget Reconciliation Act, health savings accounts, changes in flex-spending accounts and the new Medicare Modernization Act, as these issues are affecting businesses of all sizes.

The employee benefits manager and the broker should communicate about the needs of the employees and create a plan designed to fit those needs. Employees also need to be aware of and accountable for what their employer is offering in the benefit package.

Keep in mind, small businesses can qualify for group benefits with as few as two employees. Individuals also can purchase health care packages with a drug benefit. It is crucial to seek the advice of a human resources manager or broker and communicate needs in order to manage and effectively control health care spending and maximize your benefits.

Andrea Croley is co-owner of Croley Insurance and Financial in Springfield.